Kiev pays its $1.5 billion-dollar debt to Gazprom

Naftogaz, the state-owned Ukrainian gas company, has announced it has paid its debts to Russian giant Gazprom for gas delivered in November and December. Moscow had threatened Kiev with a New Year showdown.


AFP - Ukraine said Tuesday it had settled its 1.5 billion-dollar debt for gas delivered in November and December in a bid to resolve a showdown with Russia.

"The money is on the accounts of RosUkrEnergo," an intermediary company in which Russia's Gazprom has a 50 percent stake, said Valentin Zemlyansky, a spokesman for Ukraine's state energy firm Naftogaz.

"We have transferred 1.522 billion dollars," he added.

But RosUkrEnergo said it would only be able to confirm this when its bank opens on Wednesday.

"Banking hours are over, so we cannot confirm or deny this information," RosUkrEnergo's spokesman Andrei Knutov said, the Interfax news agency reported.

The dispute over the payment had earlier raised the prospect of a midwinter gas cut to Ukraine.

State-run gas giant Gazprom has also demanded payment of around 400 million dollars in late fees, an element that Naftogaz has said would be addressed after payment for the imported gas itself had been made.

Earlier the Ukrainian government issued an order for settlement of the gas debts of "up to two billion US dollars."

Gazprom had demanded Ukraine make the payment to avert a supply cut-off -- a possibility that raised concern about supplies to other countries in Europe.

"Ukraine has fully settled for the import of Russian gas in 2008," the office of President Viktor Yushchenko said earlier in a statement on its website.

The two billion dollar payment demanded by Gazprom covers gas imported by Ukraine in November and December totalling around 1.6 billion dollars, as well as the late-payment penalties.

Zemlyansky said the payments would be for all the gas imported in November and December and amounted to 1.52 billion dollars. It was not immediately clear why the sum fell short of the 1.6 billion demanded by Gazprom.

He also said discussion about the late-payment penalties would take place only after payment for the gas itself had been made.

Zemlyansky expressed hope that new gas contracts for 2009 could be worked out quickly. "We hope to sign contracts for 2009 today or tomorrow," he said.

He added that "Ukraine hopes to receive a price lower than the 250 dollars announced by Gazprom."

Gazprom has threatened to raise the price Ukraine pays for gas to over 400 dollars per 1,000 cubic metres, more than double what Ukraine pays but in line with what some EU countries currently pay.

The company's chief executive, Alexei Miller, announced Tuesday that a special "operations centre" had been set up to oversee the threatened cut-off.

He said in televised remarks that if the payment was not received by the end of Thursday Gazprom would have "no basis for gas deliveries to Ukraine".

Germany urged the two sides to find a settlement to the dispute.

"I call on the governments and gas companies of the two countries to find an agreement before the end of the year in order to stop Gazprom enacting its threat to stop supplies," Economy Minister Michael Glos said in a statement.

But Glos played down fears that any cut-off would impact supplies in Germany, calling them "unjustified".

Zemlyansky said that Ukraine would survive such a move thanks to reserves it has built up in underground reservoirs.

"If they cut the gas it will have little effect because we have enough gas to take us through to the end of the season," he told AFP.

The dispute recalled the "gas war" at the start of 2006 when Russia briefly cut supplies to its ex-Soviet neighbour, disrupting deliveries to the European Union, much of which transit through Ukraine.

The European Union depends on Russia for around a quarter of its gas consumption.

This time, Ukraine's problems paying its debts to the world's largest gas supplier have been exacerbated by the global financial crisis, which has led the national currency, the hryvnia, to plunge in value.

The dispute comes against a background of heightened tensions between Moscow and Kiev, which under Yushchenko is trying to join the NATO military alliance against Russia's strong objections.

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